Pharma Innovation in Critical Condition

New Restrictions on Prescribing, Advertising, Distribution, and Sales Could Debilitate Industry

At a time when drug development should have been spurred by the exploitation of powerful new technologies and by huge increases in R&D expenditures—which tripled to more than $45 billion between 1995 and 2007—drug approvals by the FDA have been disappointing. The 18 new medicines approved in 2007 was the lowest figure in a quarter century, and the 2008 tally of 24 represents scant improvement. Current trends in regulatory policies and requirements are likely to cause further deterioration in drug R&D and approvals.

The imposition of additional regulatory requirements and changes in policy by both the legislative and executive branches of the government will increase further the time and costs of drug development, diminish competition, and make fewer new products available. The increasingly risk-averse Congress has granted the FDA additional powers that place new restrictions on the prescribing, distribution, sale, and advertising of drugs; and at the same time, regulators have imposed new criteria—in addition to safety and efficacy—on drug developers in order to obtain even those limited approvals.

What might be considered an additional, third criterion pertains to the FDA’s recent emphasis on the obligations of pharmaceutical company executives to ensure the integrity of the global manufacturing chain of their products.

In a May 2008 speech, Doug Throckmorton, the deputy director of the FDA’s Center for Drug Evaluation and Review, said that controlling the supply chain for quality “is a very complex problem and there are a lot of pieces in place to address” adding that it “starts with the manufacturing sector understanding that there is an expectation on them to provide a manufactured quality product.” He made it clear that “first and foremost” this is an issue of “corporate responsibility.”

What sorts of changes do such statements suggest may be required? According to a prominent attorney who was a senior FDA lawyer for many years and is now in private practice, regulators will likely expect to see a more explicit, formal paper trail of control over the supply chain, extending even to third-party certification that each participant in the drug manufacturing chain is performing correctly.

The manufacturer and/or marketer of the final product will then have to certify to FDA that it has verified and certified the entire process. The former FDA lawyer compared it to Sarbanes/Oxley assurances of compliance with general business practices. These requirements will add yet another level of complexity (and cost) to drug development.

The FDA has already begun to impose what is, in effect, an additional, fourth criterion for approval of drugs: post-marketing studies as a condition of approval. They are now required in more than three-quarters of approvals.

In addition, regulators have created what amounts to a new fifth criterion that could inflict significant damage on both patients and drug companies: Seemingly arbitrarily, the FDA sometimes requires that new drugs are not merely effective but are actually superior to existing therapies, a new standard that is often difficult and extremely costly to meet.

In April 2007, the FDA announced what appears to be a landmark decision. Although the law requires that in order to be marketed, a drug must simply be shown to be safe and effective, by denying approval of Merck’s Arcoxia, a COX-2 inhibitor for the relief of arthritis pain, the FDA said that Arcoxia needed to be shown to be superior to existing drugs to merit approval.

Robert Meyer, director of the FDA office that oversees arthritis drugs, claimed that the agency’s advisory committee had sent a clear message that “simply having another drug on the market...didn’t seem to be sufficient reason” for approval. But whether or not the advisory committee meant to convey that (and in any case, advisory committee recommendations are not binding), it is specious reasoning.

In fact, for various reasons, having “another drug on the market” that appears from clinical trials data to be only as good as alternatives may be important. First, there are important differences between drugs that act through similar mechanisms: Different COX-2 inhibitors and statins, for example, were shown long after the initial approvals to have distinct and critical advantages and disadvantages, so for a given patient, physicians select one over another.

Second, if two drugs are both effective in 40% of patients with a given symptom or disease, it may not be known whether they work in the same 40%. Thus, if the drugs are effective in different patient populations, the failure of regulators to approve the second drug could deprive a large number of patients access to a useful drug. At best, practitioners would have fewer choices.

Third, a substantial fraction of the overall use of many drugs is outside the primary indication(s) specified in the original approval; these subsequent uses may be approved or off-label indications. But if a drug is not approved for its initial indication because it is not sufficiently superior to a previously approved medicine, further testing might be abandoned and other uses, therefore, never discovered.

Proving that a drug is better than existing drugs often is much more difficult and vastly more expensive than just proving that it is safe and effective, because if there are only small differences between two drugs, the clinical trials must be very large in order to attain statistical significance. Many drugs useful for some patients will founder if this new criterion is widely implemented, reducing competition in the drug market and causing prices to rise.

Wyeth’s former chairman and CEO Robert Essner described thus the implications of the requirement to show superiority: “If you’re the first company to get approved in a certain area and competitors can’t get on the market, the FDA is now establishing monopolies. And that’s certainly not their mandate.” Whatever one thinks of regulation to ensure safety and efficacy, surely we should not have an FDA that aggressively discourages competition and a wider choice of therapies.

REMS Spells Trouble

The Food and Drug Administration Amendments Act (FDAAA), which took effect on March 25, 2008, gave the FDA sweeping new powers, including the ability to require a Risk Evaluation and Mitigation Strategy (REMS) for any newly approved drug. A REMS is “a strategy to manage a known or potential serious risk associated with a drug or biological product,” which could be said to encompasses virtually every medicine.

The FDA’s explanation continues, “A REMS can include a Medication Guide, Patient Package Insert, a communication plan, elements to assure safe use, and an implementation system, and must include a timetable for assessment of the REMS.” The “elements to assure safe use” can be so drastically restrictive as to constitute a new, distinct and limited, or conditional, class of approvals.

The elements to assure safe use as defined in FDAAA may include:

“Health care providers who prescribe the drug have particular training or experience, or are specially certified.

“Pharmacies, practitioners, or health care settings that dispense the drug are specially certified.

“The drug is dispensed to patients only in certain health care settings, such as hospitals.

“The drug is dispensed [only] to patients with evidence or other documentation of safe use conditions, such as laboratory test results.

“Each patient using the drug is subject to certain monitoring.

“Each patient using the drug is enrolled in a registry.”

All of these conspire to reduce the potential market for a drug. The reality is that anything that makes a drug more difficult or complicated to prescribe causes physicians to choose it less often, even when it is needed.

These developments constitute a devastating multiple whammy that is dangerous for patients and debilitating to one of the nation’s most innovative and critical industries. A measure of the critical condition of the big pharmaceutical companies is the unprecedented pessimism of corporate leaders.

Fred Hassan, CEO of Schering-Plough, said of the current regulatory climate, “What will it take to get new drugs approved? The point is, we don’t know.” Severin Schwan, the CEO of Roche, has predicted that some major drug companies will fail because of a lack of innovative medicines that health insurers will be willing to reimburse.

Then-FDA Commissioner Andrew von Eschenbach once said that the FDA should be “a bridge to the future, not a barrier to the future.” If only the current FDA leadership and their political masters felt that way.

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